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Jennifer Smith reports at The Wall Street Journal that a recent drop in the prices for last minute shipping via tractor trailer could be a temporary phenomenon. With new regulations on their way to enforcement in April, and a charging economy, there could be upward pressure on trucking prices once again in the near future. She writes:
Manufacturers and retailers are enjoying a breather from soaring trucking costs, but many shippers say lingering problems in booking big rigs point to more turmoil ahead.
Rates on the spot market, where companies book last-minute transportation, have come down from record highs hit last month amid a nationwide shortage of available trucks. Shippers have postponed deliveries that aren’t urgent or are moving more cargo by rail, reducing pressure on trucking fleets struggling to hire drivers.
But many shippers and trucking companies warn that the lull may not last, for a number of reasons. The strong economy is boosting freight demand. Produce distributors typically hire more trucks starting this month to move crops from Mexico and Southern states to grocery stores around the country. Full enforcement begins in April for a new federal safety rule that requires truckers to electronically log hours behind the wheel, potentially removing some big rigs from the road.
Last week, the average spot rate for the most common type of big rig was $2.17 per mile, down from $2.26 in January, though still up a third from a year ago, according to online freight marketplace DAT Solutions LLC. Capacity remains tight, with demand measuring at about seven loads per available truck for the week ending Feb. 10, compared with 2.4 loads per truck during the same period in 2017, according to DAT.
Heartland Express Inc., HTLD +0.15% a large trucking company based in North Liberty, Iowa, has been turning down an average 10,000 loads a week from shippers like Walmart Inc.WMT -1.10% and Lowe’s Co s. The turndown rate was about 500 loads a week at the start of 2017.
“We’d love to haul them but we don’t have any drivers,” Heartland Chief Executive Michael Gerdin said. Carriers often have trouble recruiting drivers, particularly for long-haul trucking where drivers might spend weeks out on the road. And the tight labor market has compounded the problem, with some drivers leaving for construction or energy jobs that pay better or offer more time at home.
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